Accounting Policies of Vraj Iron & Steel Ltd. Company

Mar 31, 2025

B. Significant Accounting Policies

B.l Basis of preparation and presentation

Standalone Financial Statements have been prepared on the historical cost convention and
accrual basis except for the following:

• certain financial assets and liabilities including derivative instruments measured at fair
value

• defined benefit plans - plan assets measured at fair value

The Standalone Financial Statements have been prepared to comply with the Indian
Accounting Standards (Tnd AS''), including the rules notified under the relevant provisions of
the Companies Act, 2013, (as amended from time to time) and Presentation and disclosure
requirements of Division II of Schedule III to the Companies Act, 2013(lnd AS Compliant
Schedule III) as amended from time to time.

The Company''s Standalone Financial Statements are presented in Indian Rupees (K), which is
also its functional currency and all values are rounded in millions with two decimal places,
except when otherwise stated.

B.2 Current and Non-Current Classification

The Company presents assets and liabilities in the Standalone Balance Sheet based on
Current/ Non-Current classification.

An asset is treated as Current when it is

• Expects to be realise or intends to be sell or consume in normal operating cycle,

• Held primarily for the purpose of trading,

• Expected to be realised within twelve months after the reporting period, or

• Cash or cash equivalent unless restricted from being exchanged or used to settle a
liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when: -

• It is expects to be settle in normal operating cycle,

• It is held primarily for the purpose of trading,

• It is due to be settled within twelve months after the reporting period, or

• There is no unconditional right to defer the settlement of the liability for at least
twelve months after the reporting period.

The Company classifies all other liabilities as non-current.

Deferred tax assets and liabilities are classified as non-current assets or liabilities.

B. 3 Use of estimates

The preparation of the standalone financial statement is in conformity with Ind AS requiring
management to make judgements, estimates and assumptions that affect the reported
amounts of revenues, expenses, assets and liabilities and the grouping disclosures, and the
disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could
result in outcomes that require a material adjustment to the carrying amount of assets or
liabilities affected in future periods. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be reasonable under the
circumstances existing when the standalone financial statement were prepared. The
estimates and underlying assumptions are reviewed on an ongoing basis. Revision to
accounting estimates is recognized in the year in which the estimates are revised and in any
future year affected.

C. Summary of significant accounting policies

C.l Property, Plant and Equipment

Property, Plant and Equipment are stated at cost, net of recoverable taxes, trade discount
and rebates less accumulated depreciation and impairment losses, if any. Such cost includes
purchase price, borrowing cost and any cost directly attributable to bringing the asset to the
location and condition necessary for its intended use.

Subsequent costs are included in the asset''s carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future economic benefits associated with
the item will flow to the entity and the cost can be measured reliably. Property, Plant and
Equipment which are significant to the total cost of that item of Property, Plant and
Equipment and having different useful life are accounted separately. Other Indirect Expenses
incurred relating to project, net of income earned during the project development stage
prior to its intended use, are considered as pre-operative expenses and disclosed under
Capital Work-in-Progress.

Spare parts, procured along with the related Plant & Machinery or subsequently, if
capitalized and added in the carrying amount of such item is depreciated over the residual
useful life of the related plant and machinery or their useful life whichever is lower. Stand-by
equipment and servicing equipment which meet the definition of property, plant and
equipment are capitalized and others are carried as inventory and recognized in the income
statement on consumption.

If significant parts of Property, Plant and Equipment have different useful lives, then they are
accounted for as separate items (major components) of property, plant and equipment. The
cost of replacing part of an item of property, plant and equipment or major inspections
performed, are recognized in the carrying amount of the item if it is probable that the future
economic benefits embodied within the item will flow to the Company and its cost can be
measured reliably. The costs of all other repairs and maintenance are recognized in the
Standalone Statement of Profit & Loss as and when incurred.

Gains and losses on disposal/ derecognition (when no future economic benefits are expected
or the same is held for sale) of a Property, Plant and Equipment are determined by
comparing net disposal proceeds/ fair value (less estimated cost of sale) with the carrying
amount of property, plant and equipment. These are included in profit or loss within other
gains/ losses.

Residual values, useful lives and methods of depreciation are reviewed at each financial year
end and adjusted prospectively.

Depreciation has been provided on written down method on useful life assigned to each
asset in accordance with Schedule II of the Companies Act, 2013, on a pro-rata basis.

C.2 Investment Properties

Property held to earn rentals or for capital appreciation or both, rather than for use in the
production or supply of goods or services or for administrative purposes are covered herein.
Property held for sale or for sublease are not classified as Investment Properties. Investment
properties are measured at cost less accumulated depreciation and impairment losses. Cost
includes expenditure that is directly attributable in bringing the asset to the location and
condition necessary for its intended use. Investment properties are depreciated on straight
line method on prorata basis at the rates specified therein. Subsequent expenditure
including cost of major overhaul and inspection is recognized as an increase in the carrying
amount of the asset when it is probable that future economic benefits associated with the
item will flow to the Company and the cost of expenditure can be measured reliably. Fair
Value of investment properties shall be disclosed, otherwise proper explanation shall be
provided.

C.3 Intangible Assets

Intangible Assets are recognised, when it is probable that associated future economic
benefits would flow to the Company, having definite useful lives (subsequent to initial
recognition). It is reported at cost less accumulated amortisation and impairment losses, if
any. Cost comprises the purchase price and any attributable cost of bringing the asset to its
working condition for its intended use, but excludes trade discount, rebate, recoverable
taxes.

The amortization period and the amortization method for an intangible asset with a finite
useful life are reviewed at the end of each reporting period and adjusted prospectively, if
appropriate. Useful life of Computer Software is estimated to be 6 years.

An Intangible asset is derecognized when no future economic benefits are expected to arise
from the continued use of the asset or upon disposal. Any gain or loss on disposal/
derecognition is recognized in the Standalone Statement of Profit &Loss.

C.4 Capital work in progress

Projects under which assets are not ready for their intended use are carried at cost,
comprising direct cost, related incidental expenses, expenditure in relation to survey and
investigation and attributable interest. Such expenditure is either capitalized on completion
of the project or the same is expensed in the year in which it is decided to abandon such
project.

C.5 Leases

The determination of whether an arrangement is (or contains) a lease is based on the
substance of the arrangement at the inception of the lease. The Company, as a lessee,
recognises a right-of-use asset and a lease liability for its leasing arrangements, if the
contract conveys the right to control the use of an identified asset. The contract conveys the
right to control the use of an identified asset, if it involves the use of an identified asset and
the Company has substantially all of the economic benefits from use of the asset and has
right to direct the use of the identified asset.

A lease is classified on the inception date as a finance or an operating lease. Leases under
which the Company assumes substantially all the risks and rewards of ownership are
classified as finance leases.

The cost of the right-of-use asset shall comprise of the amount of the initial measurement of
the lease liability adjusted for any lease payments made at or before the commencement
date plus any initial direct costs incurred. The right-of-use assets is subsequently measured at
cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted
for any re-measurement of the lease liability. The right-of-use assets is depreciated using the
straight-line method from the commencement date over the shorter of lease term or useful
life of right-of-use asset.

The Company measures the lease liability at the present value of the lease payments that are
not paid at the commencement date of the lease. The lease payments are discounted using
the interest rate implicit in the lease, if that rate can be readily determined. If that rate
cannot be readily determined, the Company uses incremental borrowing rate. Minimum
lease payments made under finance leases are apportioned between the finance expense
and the reduction of the outstanding liability.

The finance expense is allocated to each period during the lease term so as to produce a
constant periodic rate of interest on the remaining balance of the liability.

Leases under which substantially all the risks and rewards of ownership are not transferred
to the Company are classified as operating leases. Lease payments under operating leases
are recognized as an expense on a straight line basis in the Standalone Statement of Profit
and Loss over the lease term except where the lease payments are structured to increase in
line with expected general inflation.

For short-term and low value leases, the Company recognises the lease payments as an
operating expense on a straight-line basis over the lease term.

C.6 Inventories

Cost of raw material, finished goods/ work in progress. Stores are measured at lower of cost
or net realisable value after providing for obsolescence, if any, whereas by-products are
valued at net realisable value. Cost of inventories comprises of cost of purchase, cost of
conversion and other costs including manufacturing overheads (net of recoverable taxes)
incurred in bringing them to their respective present location and condition. Costs includes
all expenses incurred in bringing the inventories to their present location and condition.

Cost of finished goods/ work in progress is determined on weighted average basis. Cost of
inventory is assigned using FIFO. Cost of opening and closing stock excludes taxes that are
subsequently recoverable from taxing authorities.

Net realisable value is the estimated selling price in the ordinary course of business, less
estimated costs of completion and estimated costs necessary to make the sale.

C.7 Financial Instruments

C.7.1 Financial Assets

C.7.1.1 Initial Recognition and Measurement

All Financial Assets are initially recognised at fair value and transaction costs. Transaction
costs that are directly attributable to the acquisition or issue of Financial Assets, are adjusted
to fair value and balance is expensed in the Standalone Statement of Profit and Loss.
Purchase and sale of Financial Assets are recognised using trade date accounting.

C.7.1.2 Subsequent Measurement

C.7.1.2.1Financial Assets measured at Amortised Cost (AC)

A Financial Asset is measured at Amortised Cost if it is held within a business model whose
objective is to hold the asset in order to collect contractual cash flows and the contractual
terms of the Financial Asset give rise to cash flows on specified dates that represent solely
payments of principal and interest on the principal amount outstanding.

C.7.1.2.2Financial Assets measured at Fair Value Through Other Comprehensive Income (FVTOCI)

A Financial Asset is measured at FVTOCI if it is held within a business model whose objective
is achieved by both collecting contractual cash flows and selling Financial Assets and the
contractual terms of the Financial Asset give rise on specified dates to cash flows that
represents solely payments of principal and interest on the principal amount outstanding.

C.7.1.2.3 Financial Assets measured at Fair Value Through Profit or Loss (FVTPL)

A Financial Asset which is not classified in any of the above categories are measured at
FVTPL. Financial assets are reclassified subsequent to their recognition, if the Company
changes its business model for managing those financial assets. Changes in business model
are made and applied prospectively from the reclassification date which is the first day of
immediately next reporting period following the changes in business model in accordance
with principles laid down under Ind AS 109 - Financial Instruments.

C.7.1.3 Investment in Subsidiaries, Associates and Joint Ventures

The Company has accounted for its investments in Subsidiaries, associates and joint venture
at cost less impairment loss (if any).

C.7.1.4 Other Equity Investments

All other equity investments are measured at fair value, with value changes recognised in
Standalone Statement of Profit and Loss, except for those equity investments for which the
Company has elected to present the value changes in ''Other Comprehensive Income''.
However, dividend on such equity investments is recognised in Standalone Statement of
Profit and loss when the Company''s right to receive payment is established.

C.7.1.5 Impairment of Financial Assets

In accordance with Ind AS 109, the Company uses ''Expected Credit Loss'' (ECL) model, for
evaluating impairment of Financial Assets other than those measured at Fair Value Through
Profit and Loss (FVTPL).

Expected Credit Losses are measured through a loss allowance at an amount equal to:

• The 12-months expected credit losses (expected credit losses that result from those default
events on the financial instrument that are possible within 12 months after the reporting
date); or

• Full lifetime expected credit losses (expected credit losses that result from all possible
default events over the life of the financial instrument).

For Trade Receivables the Company applies ''simplified approach'' which requires expected
lifetime losses to be recognised from initial recognition of the receivables.

The Company uses historical default rates to determine impairment loss on the portfolio of
trade receivables. At every reporting date these historical default rates are reviewed and
changes in the forward-looking estimates are analysed.

For other assets, the Company uses 12 month ECL to provide for impairment loss where
there is no significant increase in credit risk. If there is significant increase in credit risk full
lifetime ECL is used.

ECL impairment loss allowance (or reversal) recognized during the period is recognized as
income/ expense in the Standalone Statement of Profit and Loss.

C.7.2 Financial Liabilities

C.7.2.1 Initial Recognition and Measurement

All Financial Liabilities are recognised at fair value and in case of borrowings, net of directly
attributable cost. Fees of recurring nature are directly recognised in the Standalone
Statement of Profit and Loss as finance cost.

C.7.2.2 Subsequent Measurement

Financial Liabilities are carried at amortised cost using the effective interest method. For
trade and other payables maturing within one year from the balance sheet date, the carrying
amounts approximate fair value due to the short maturity of these instruments.

C.7.3 Derecognition of Financial Instruments

The Company derecognises a Financial Asset when the contractual rights to the cash flows
from the Financial Asset expire or it transfers the Financial Asset and the transfer qualifies for
derecognition under Ind AS 109. A Financial liability (or a part of a financial liability) is
derecognised from the Company''s Balance Sheet when the obligation specified in the
contract is discharged or cancelled or expires.

C.7.4 Offsetting

Financial Assets and Financial Liabilities are offset and the net amount is presented in the
balance sheet when, and only when, the Company has a legally enforceable right to set off
the amount and it intends, either to settle them on a net basis or to realise the asset and
settle the liability simultaneously.

C.7.5 Derivatives

The Company uses derivative financial instruments such as forward currency contracts to
hedge its foreign currency risks. Such derivative financial instruments are initially recognized
at fair value on the date on which a derivative contract is entered into and are subsequently
re-measured at fair value. Derivatives are carried as financial assets when the fair value is
positive and as financial liabilities when the fair value is negative. Any gains or losses arising
from changes in the fair value of derivatives are taken directly to the Standalone Statement
of Profit and Loss.

C.8 Fair value measurements of financial instruments

When the fair value of financial assets and financial liabilities recorded in the balance sheet
cannot be measured based on quoted prices in active markets, their fair value is measured
using valuation techniques including Discounted Cash Flow Model. The inputs to these
models are taken from observable markets where possible, but where this is not feasible, a
degree of judgement is required in establishing fair value. Judgements include considerations
of inputs such as liquidity risks, credit risks and volatility. Changes in assumptions about
these factors could affect the reported fair value of financial instruments. Further details are
set out in note 39.

C.9 Impairment of Non-Financial Assets

The Company assesses at each reporting date as to whether there is any indication that any
Property, Plant and Equipment and Intangible Assets or group of Assets, called Cash
Generating Units (CGU) may be impaired. If any such indication exists, the recoverable
amount of an asset or CGU is estimated to determine the extent of impairment, if any. When
it is not possible to estimate the recoverable amount of an individual asset, the Company
estimates the recoverable amount of the CGU to which the asset belongs.

An impairment loss is recognised in the Standalone Statement of Profit and Loss to the
extent, asset''s carrying amount exceeds its recoverable amount. The recoverable amount is
higher of an asset''s fair value less cost of disposal and value in use. Value in use is based on
the estimated future cash flows, discounted to their present value using pre-tax discount rate
that reflects current market assessments of the time value of money and risk specific to the
assets. After impairment, depreciation or amortization is provided on the revised carrying
amount of the assets over its remaining useful life.

The impairment loss recognised in prior accounting period is reversed if there has been a
change in the estimate of recoverable amount. Such a reversal is made only to the extent
that the asset''s carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortization, if no impairment loss had been recognized.

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Mar 31, 2024

B. Significant Accounting Policies

B. 1 Basis of preparation and presentation

Standalone Financial Statements have been prepared on the historical cost convention and accrual basis except for the following:

• certain financial assets and liabilities including derivative instruments measured at fair value

• defined benefit plans - plan assets measured at fair value

The Standalone Financial Statements have been prepared to comply with the Indian Accounting Standards (‘Ind AS’), including the rules notified under the relevant provisions of the Companies Act, 2013, (as amended from time to time) and Presentation and disclosure requirements of Division II of Schedule III to the Companies Act, 2013(Ind AS Compliant Schedule III) as amended from time to time.

The Company’s Standalone Financial Statements are presented in Indian Rupees (?), which is also its functional currency and all values are rounded in millions with two decimal places, except when otherwise stated.

B.2 Current and Non-Current Classification

The Company presents assets and liabilities in the Standalone Balance Sheet based on Current/ NonCurrent classification.

An asset is treated as Current when it is :-

• Expects to be realise or intends to be sell or consume in normal operating cycle,

• Held primarily for the purpose of trading,

• Expected to be realised within twelve months after the reporting period, or

• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when: -

• It is expects to be settle in normal operating cycle,

• It is held primarily for the purpose of trading,

• It is due to be settled within twelve months after the reporting period, or

• There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

The Company classifies all other liabilities as non-current.

Deferred tax assets and liabilities are classified as non-current assets or liabilities.

Notes forming part of Standalone Financial Statements

B. 3 Use of estimates

The preparation of the standalone financial statement is in conformity with Ind AS requiring management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the grouping disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances existing when the standalone financial statement were prepared. The estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates is recognized in the year in which the estimates are revised and in any future year affected.

C. Summary of significant accounting policies

C.1 Property, Plant and Equipment

Property, Plant and Equipment are stated at cost, net of recoverable taxes, trade discount and rebates less accumulated depreciation and impairment losses, if any. Such cost includes purchase price, borrowing cost and any cost directly attributable to bringing the asset to the location and condition necessary for its intended use.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably. Property, Plant and Equipment which are significant to the total cost of that item of Property, Plant and Equipment and having different useful life are accounted separately. Other Indirect Expenses incurred relating to project, net of income earned during the project development stage prior to its intended use, are considered as pre-operative expenses and disclosed under Capital Work-in-Progress.

Spare parts, procured along with the related Plant & Machinery or subsequently, if capitalized and added in the carrying amount of such item is depreciated over the residual useful life of the related plant and machinery or their useful life whichever is lower. Stand-by equipment and servicing equipment which meet the definition of property, plant and equipment are capitalized and others are carried as inventory and recognized in the income statement on consumption.

If significant parts of Property, Plant and Equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment. The cost of replacing part of an item of property, plant and equipment or major inspections performed, are recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the item will flow to the Company and its cost can be measured reliably. The costs of all other repairs and maintenance are recognized in the Standalone Statement of Profit & Loss as and when incurred.

Gains and losses on disposal/ derecognition (when no future economic benefits are expected or the same is held for sale) of a Property, Plant and Equipment are determined by comparing net disposal proceeds/ fair value (less estimated cost of sale) with the carrying amount of property, plant and equipment. These are included in profit or loss within other gains/ losses.

Residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively.

Depreciation has been provided on written down method on useful life assigned to each asset in accordance with Schedule II of the Companies Act, 2013, on a pro-rata basis.

C.2 Investment Properties

Property held to earn rentals or for capital appreciation or both, rather than for use in the production or supply of goods or services or for administrative purposes are covered herein. Property held for sale or for sublease are not classified as Investment Properties. Investment properties are measured at cost less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable in bringing the asset to the location and condition necessary for its intended use. Investment properties are depreciated on straight line method on prorata basis at the rates specified therein. Subsequent

expenditure including cost of major overhaul and inspection is recognized as an increase in the carrying amount of the asset when it is probable that future economic benefits associated with the item will flow to the Company and the cost of expenditure can be measured reliably. Fair Value of investment properties shall be disclosed, otherwise proper explanation shall be provided.

C.3 Intangible Assets

Intangible Assets are recognised, when it is probable that associated future economic benefits would flow to the Company, having definite useful lives (subsequent to initial recognition). It is reported at cost less accumulated amortisation and impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use, but excludes trade discount, rebate, recoverable taxes.

The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at the end of each reporting period and adjusted prospectively, if appropriate. Useful life of Computer Software is estimated to be 6 years.

An Intangible asset is derecognized when no future economic benefits are expected to arise from the continued use of the asset or upon disposal. Any gain or loss on disposal/ derecognition is recognized in the Standalone Statement of Profit &Loss.

C.4 Capital work in progress

Projects under which assets are not ready for their intended use are carried at cost, comprising direct cost, related incidental expenses, expenditure in relation to survey and investigation and attributable interest. Such expenditure is either capitalized on completion of the project or the same is expensed in the year in which it is decided to abandon such project.

C.5 Leases

The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The Company, as a lessee, recognises a right-of-use asset and a lease liability for its leasing arrangements, if the contract conveys the right to control the use of an identified asset. The contract conveys the right to control the use of an identified asset, if it involves the use of an identified asset and the Company has substantially all of the economic benefits from use of the asset and has right to direct the use of the identified asset.

A lease is classified on the inception date as a finance or an operating lease. Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases.

The cost of the right-of-use asset shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs incurred. The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The right-of-use assets is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset.

The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate.Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability.

The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Leases under which substantially all the risks and rewards of ownership are not transferred to the Company are classified as operating leases. Lease payments under operating leases are recognized as an expense on a straight line basis in the Standalone Statement of Profit and Loss over the lease term except where the lease payments are structured to increase in line with expected general inflation.

For short-term and low value leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the lease term.

C.6 Inventories

Cost of raw material, finished goods/ work in progress, Stores are measured at lower of cost or net realisable value after providing for obsolescence, if any, whereas by-products are valued at net realisable value. Cost of inventories comprises of cost of purchase, cost of conversion and other costs including manufacturing overheads (net of recoverable taxes) incurred in bringing them to their respective present location and condition. Costs includes all expenses incurred in bringing the inventories to their present location and condition.

Cost of finished goods/ work in progress is determined on weighted average basis. Cost of inventory is assigned using FIFO. Cost of opening and closing stock excludes taxes that are subsequently recoverable from taxing authorities.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

C.7 Financial Instruments

C.7.1 Financial Assets

C.7.1.1 Initial Recognition and Measurement

All Financial Assets are initially recognised at fair value and transaction costs. Transaction costs that are directly attributable to the acquisition or issue of Financial Assets, are adjusted to fair value and balance is expensed in the Standalone Statement of Profit and Loss. Purchase and sale of Financial Assets are recognised using trade date accounting.

C.7.1.2 Subsequent Measurement

C.7.1.2.1Financial Assets measured at Amortised Cost (AC)

A Financial Asset is measured at Amortised Cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the Financial Asset give rise to cash flows on specified dates that represent solely payments of principal and interest on the principal amount outstanding.

C.7.1.2.2Financial Assets measured at Fair Value Through Other Comprehensive Income (FVTOCI)

A Financial Asset is measured at FVTOCI if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling Financial Assets and the contractual terms of the Financial Asset give rise on specified dates to cash flows that represents solely payments of principal and interest on the principal amount outstanding.

C.7.1.2.3 Financial Assets measured at Fair Value Through Profit or Loss (FVTPL)

A Financial Asset which is not classified in any of the above categories are measured at FVTPL. Financial assets are reclassified subsequent to their recognition, if the Company changes its business model for managing those financial assets. Changes in business model are made and applied prospectively from the reclassification date which is the first day of immediately next reporting period following the changes in business model in accordance with principles laid down under Ind AS 109 - Financial Instruments.

C.7.1.3 Investment in Subsidiaries, Associates and Joint Ventures

The Company has accounted for its investments in Subsidiaries, associates and joint venture at cost less impairment loss (if any).

C.7.1.4 Other Equity Investments

All other equity investments are measured at fair value, with value changes recognised in Standalone Statement of Profit and Loss, except for those equity investments for which the Company has elected to present the value changes in ‘Other Comprehensive Income’. However, dividend on such equity investments is recognised in Standalone Statement of Profit and loss when the Company’s right to receive payment is established.

C.7.1.5 Impairment of Financial Assets

In accordance with Ind AS 109, the Company uses ‘Expected Credit Loss’ (ECL) model, for evaluating impairment of Financial Assets other than those measured at Fair Value Through Profit and Loss (FVTPL). Expected Credit Losses are measured through a loss allowance at an amount equal to:

• The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or

• Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).

For Trade Receivables the Company applies ‘simplified approach’ which requires expected lifetime losses to be recognised from initial recognition of the receivables.

The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forwardlooking estimates are analysed.

For other assets, the Company uses 12 month ECL to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk full lifetime ECL is used.

ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the Standalone Statement of Profit and Loss.

C.7.2 Financial Liabilities

C.7.2.1 Initial Recognition and Measurement

All Financial Liabilities are recognised at fair value and in case of borrowings, net of directly attributable cost. Fees of recurring nature are directly recognised in the Standalone Statement of Profit and Loss as finance cost.

C.7.2.2 Subsequent Measurement

Financial Liabilities are carried at amortised cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.

C.7.3 Derecognition of Financial Instruments

The Company derecognises a Financial Asset when the contractual rights to the cash flows from the Financial Asset expire or it transfers the Financial Asset and the transfer qualifies for derecognition under Ind AS 109. A Financial liability (or a part of a financial liability) is derecognised from the Company’s Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.

C.7.4 Offsetting

Financial Assets and Financial Liabilities are offset and the net amount is presented in the balance sheet when, and only when, the Company has a legally enforceable right to set off the amount and it intends, either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

C.7.5 Derivatives

The Company uses derivative financial instruments such as forward currency contracts to hedge its foreign currency risks. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken directly to the Standalone Statement of Profit and Loss.

C.8 Fair value measurements of financial instruments

When the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including Discounted Cash Flow Model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair value. Judgements include considerations of inputs such as liquidity risks, credit risks and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. Further details are set out in note 39.

C.9 Impairment of Non-Financial Assets

The Company assesses at each reporting date as to whether there is any indication that any Property, Plant and Equipment and Intangible Assets or group of Assets, called Cash Generating Units (CGU) may be impaired. If any such indication exists, the recoverable amount of an asset or CGU is estimated to determine the extent of impairment, if any. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the CGU to which the asset belongs.

An impairment loss is recognised in the Standalone Statement of Profit and Loss to the extent, asset’s carrying amount exceeds its recoverable amount. The recoverable amount is higher of an asset’s fair value less cost of disposal and value in use. Value in use is based on the estimated future cash flows, discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and risk specific to the assets. After impairment, depreciation or amortization is provided on the revised carrying amount of the assets over its remaining useful life.

The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount. Such a reversal is made only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.